1. “The production possibility curve reflects the different combination of goods, which an economy can produce, given its state of technology and total resources.” With reference to statement given above explain the guns-versus-butter debate.
2. Explain the marketing approach to demand measurement. Briefly discuss the three important sources of data used in demand forecasting.
3. How is Accounting Costs different from Economic Costs? Explain with the help of an example how an income statement prepared by accountant is different from income statement prepared by economist?
4. … [Read more...]

1. Opportunity costs are the ‘costs of sacrificed alternatives.’ Discuss with the help of examples.
2. How are income effect and substitution effect important in explaining the negative slope of demand functions? Explain giving examples from real world.
3. When there are 2 inputs K, L, given the price of capital (PK)= 10 and price of labour (PL)=20. Total Expenditure C=100. Draw and explain the effect on the isocost curve in case of the following: -
(i) decrease in price of labour (PL)=10
(ii) increase in the price of capital (PK)= 20
(iii) decrease in the price of capital (PK)= … [Read more...]

1. Describe Incremental Cost. Differentiate between Incremental Cost and Equi- Marginal Principle. Explain how does consumer maximize utility with the help of Equi-Marginal Principle?
2. A firm’s demand function is given as P=32-6Q and the average cost function as AC=Q2 – 7.5Q+50+2/Q. Calculate the level of output Q which:-
a) maximizes total revenue
b) maximizes profits
3. Discuss Long- Run Cost Functions. Why long run cost curve is called a planning curve and explain how does it help in future decision making process?
4. Why is there a kink in the market demand curve of … [Read more...]

1. “Sales- revenue maximization” is the main objective of a firm. Discuss this statement with the help of an example.
2. “The main determinant of elasticity is the availability of substitutes.” Explain this statement in the context of price elasticity of demand.
3. Answer the following:-
(a) Explain average cost and marginal cost
(b) Find (i) marginal cost and (ii) the average cost functions for the following total cost function. Calculate them at Q−4 and Q−6
TC−5Q2 +10Q+12
4. Does Price Discrimination exist in the real world? Discuss with reference to any particular product or … [Read more...]

1. “The traditional objective of the firm has been profit maximization. It is still regarded as the most common and theoretically the most plausible objective of business firms.” Discuss.
2. With reference to the marketing approach of demand measurement explain any two important sources of data used in demand forecasting.
3. Given the total cost function: C=16q2 + 10q + 36 (where q is the output)
Find: (i) values of q for which ATC is falling, and
(ii) values of q for which ATC is rising.
4.“A Tata Sky Direct - to - Home (DTH) service provider charges a base fee for booking into … [Read more...]

1. “The opportunity cost of anything is the return that can be had from the next best alternative use.” Explain this statement with reference to gun-versus-butter debate.
2. Describe each of the variables of demand function separately with the help of examples.
3. Break-even production of a firm is 4,000 units, its total fixed cost is Rs. 40,000 and the variable cost per unit is Rs. 20.
(a) Find out the price of the product.
(b) What should be the firm’s output to earn profit contribution of Rs. 20,000?
4. “Price discrimination refers to the situation where a monopoly firm … [Read more...]

1. Explain the objectives of a firm. How is profit maximization the most important objective of a firm? Discuss.
2. What are the marketing approaches to demand measurement ? Explain how Delphi Technique is different from Market Experiments Technique.
3. Differentiate between Economies of Scale and Economies of Scope. Give examples .
4. (a) Briefly explain the Profit Maximizing output in the short run
(b)Determine the equilibrium price and equilibrium output of the firm under perfect competition, in the following situation:
Aggregate Demand: Q = 50 – 1.0p
Aggregate Supply: Q = … [Read more...]

1. What is opportunity cost? Explain with the help of an example, why assumption of constant opportunity cost is very unrealistic?
2. (a) Explain law of demand with the help of a demand schedule and demand curve.
(b) Calculate point elasticity of demand for demand function Q=10-2p for
decrease in price from Rs 3 to Rs 2
3. “Cost function expresses the relationship between the cost and its determinants.” Discuss this statement giving examples from any firm of your choice.
4. “A characteristic of oligopolistic market is that, once the general price level is established it tends to … [Read more...]

1. Explain the discounting principle. Using the discounting principle calculate the present value of an annuity of five years at Rs. 500 payments made at the end of each of the next five years at 10% interest.
2. With reference to the marketing approach of demand measurement explain any two important sources of data used in demand forecasting.
3. How are Isoquants different from Isocost? Illustrate using graphs.
4. “An analytical tool frequently employed by managerial economists is the break even chart, an important application of cost functions.” Discuss this statement giving … [Read more...]

1. “The Opportunity Cost of a product is the return that can be had from the next best alterative use.” Explain this statement using Production Possibility Curve.
2. Define demand function and explain the impact of price of complements and price of substitutes on demand function.
3. Compare and contrast Economies of Scale and Economies of Scope. Explain why it is important for managers to understand Economies of Scale.
4. Consider a monopolist facing the following demand and cost curves.
P = 50 - 2Q C = 25+10Q
(Hint: Total demand at any point P will be the summation of two … [Read more...]